More change is coming to the Fair Work Act 2009 (Cth) - what your business needs to know and do

What does your business need to know?

With more change coming to the Fair Work Act 2009 (Cth), it is critical that businesses, including employers, franchisors and parent companies, understand the risk of non-compliance is becoming more significant and more expensive. A range of new provisions will be put in place to protect vulnerable workers and penalise non-compliant businesses, addressing concerns directly from a number of high profile franchisee underpayment claims in recent times. The changes include:

  • Franchisor and Holding Company Liability - New offences to make franchisors and parent companies directly liable for underpayments and other breaches of the Fair Work Act by their franchisees and subsidiaries - where they knew or should have reasonably known of the contraventions and failed to take reasonable steps to prevent them.

  • New Category of Offence and Increased Penalties - New category of 'serious contravention' breach of the Fair Work Act, which will attract significant maximum penalties per breach - for companies $630,000 and individuals $126,000. These increased penalties will apply where the contravention relates to a civil penalty provision in the Fair Work Act, including a breach of the National Employment Standards, a Modern Award, enterprise agreement, payroll record keeping obligations and was knowingly committed as part of a systemic course of conduct.

  • Record Keeping Obligations and Reverse Onus of Proof in the Absence of Records - Increased maximum penalties and focus by the Fair Work Ombudsman to ensure employers are keeping time and wages and required payroll records for 7 years and providing accurate information to employees and a new reverse onus of proof on employers to disprove a wages claim if made in court.

  • Prohibition on Cash Back Arrangements - To tighten the existing restrictions on employers making unlawful deductions from the pay of employees. This will expressly prohibit employers from unreasonably requiring existing or prospective employees to make payments which benefit their employer or a related party.

So what does your business need to do?

  • Review Key Employment Documents - Undertake a review of your employment contracts, policies and procedures and make sure they are consistent with the Fair Work Act, National Employment Standards and any applicable Modern Awards.

  • Check what Modern Awards apply in your business - Also check your rates of pay. Are you compliant with the relevant Modern Award terms and paying your employees correctly?

  • Audit your Payroll Records - Make sure you are recording and retaining what is legally required - getting it wrong will be an even more expensive exercise shortly.

  • Review Franchise Agreements and Operations Manuals - If your business has a significant degree of influence or control over franchisees or a subsidiary, review your franchise agreements and operational systems and manuals, and update these accordingly to ensure compliance.

  • Implement Monitoring - Regularly monitor any franchisees or subsidiary companies for compliance.

  • Internal Briefings - Make sure your directors, officers and key management personnel understand the upcoming changes and implement the required changes in your business.

Need our advice or support to navigate the Fair Work system and these changes to ensure you are compliant? Contact us at IR Legal Solutions, we actively work with our clients to ensure they are compliant.